The Transition from Outsourcing to Globally Distributed Engineering Teams

By Arpan Jhaveri
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According to Dunn and Bradstreet, “20 to 25% of all outsourcing relationships fail within two years, and 50% fail within five.” Or, as Villanova business school professor Steve Andriole said, “marriages fail at about the same rate as outsourcing deals.”

Outsourcing relationships can take many forms–hiring temporary workers, freelancers, or contractors through IT staff augmentation agencies, or handing off projects to nearshore or offshore firms. What they all have in common is a short-term, hands-off approach that places projects under the control of people that are not necessarily invested in the client’s success.

The chief motivation for all of these outsourcing relationships is to lower expenses. “Everyone knows the primary driver: cost savings,” Andriole said. “But the real challenges are related to project and program management.” 

When the software is handed-off to contractors, the client gives them control of the project or product. That’s risky. “When you outsource your software, you turn the keys to your competitive kingdom over to vendors,” Andriole said. “Are you sure you want to do that just to save (even a lot of) money?”

Traditional Software Outsourcing is Outdated

Traditional software outsourcing is especially ill-suited for the SaaS world of continuous integration and continuous delivery. Software is never really done, and even specific features are continually evolving. Most teams need long-term teammates, not temps. Senior, high-performing engineers are still hard to find.  

This is why a new software outsourcing model has emerged amid the shortage of engineers in North America and has accelerated as companies need to be faster and more flexible in a constantly changing environment. This is Staff Augmentation: 2.0. Its focus is on supporting internal software teams with long-term, high-performing engineers from regions of the world where talent is plentiful, but opportunities are scarce. This model differs from traditional software outsourcing or staff augmentation with freelancers in that the focus is on building long-term, integrated teams that work together to build better products faster–different ROI metrics than cost alone.

Build Globally Distributed Teams With Staff Augmentation 2.0

Staff augmentation 2.0 is all about supporting and sustaining high performing teams. Engineers are vetted and ranked based not just on their resumes but also on soft skills like leadership, creativity, and problem-solving. Then they are matched with client teams based on cultural fit as well as technical fit. Finally, the engineers are managed and paid by the staff augmentation firm. The result is that teams in need of software developers can hire proven engineers faster while reducing management overhead. 

With Engineering Staff Augmentation 2.0, you’re not outsourcing a project to a company; you’re insourcing the skills and experience your team needs to succeed for the long-term–without the time and expense of recruiting, onboarding, and managing full-time internal employees. The model is ideal for agile, CI/CD teams that are moving fast and constantly innovating. It’s also an ideal model for this time of pandemics and shelter-in-place policies. The engineers who work for these staff augmentation firms are experts at remote software development and remote teamwork. 

Great engineers are still hard to find, especially with the right skills and experience a specific team might need. Engineering Staff Augmentation 2.0 opens the door to a world of high-performing engineers that are ready to get to work. It’s never been easier to collaborate with global developers and take advantage of global talent, perspectives, and ideas. It’s not your father’s outsourcing–it’s about building great teams not offloading projects.

To learn more download the e-book, “Engineering Staff Augmentation 2.0: Software Outsourcing that Builds High-Performing Team.”

Written by
Arpan Jhaveri